Customise your CPF calculation settings with this new feature!

We are happy to announce the launch of a new feature that gives you more control over how CPF is calculated on Additional Wages (AW). Since you have more insight into the earnings of your employees, you can now customise your CPF settings by choosing the method that most accurately calculates CPF for your employees.

When calculating CPF contributions, the additional wage (AW) ceiling is calculated as:

102 000 – Total Ordinary Wage subject to CPF for the year.

Since the total ordinary wages (OW) subject to CPF used in the formula cannot be accurately determined until the end of the year, an estimate needs to be made. We’re now giving you the option to choose how this estimate is calculated.

If it’s the employee’s first year of employment with your company, you can select to estimate total OW using:

• Year-to-date OW on prior payslips (subject to CPF) + a projected OW for the remainder of the year based on the current month’s basic salary, or
• Year-to-date basic salary on prior payslips (subject to CPF) only (i.e. no projection for the remainder of the year).

If it’s not the employee’s first year of employment with your company, you can select to estimate the total OW using:

• Year-to-date OW on prior payslips (subject to CPF) + a projected OW for the remainder of the year based on the current month’s basic salary.

At the end of the year when all actual figures are known, the total CPF liability for the year can be accurately calculated. Please be aware that the CPF for December could therefore include an adjustment for any over or under payments made in prior months. For that reason, we stress the importance of selecting the method that will most accurately determine CPF. This will prevent unusually large CPF payments due at the end of the year. Alternatively, this could also occur if an employee is terminated.

To learn how to customise your CPF settings, view our help page here.

Team SimplePay